Bank of America Corp.
Bank of America is the second-largest bank in the US (behind Citigroup). It has the country's most extensive branch network though, being located in 30 states. In 2004, Bank of America purchased FleetBoston for $50 billion and in 2006, credit card giant MBNA.Profile, Hoovers, accessed July 2007. In 2008 the bank purchased Merrill Lynch during the financial crisis. Coal issues }} Financial crisis and the bailout On September 15, 2008, as the financial crisis peaked and the same day that Lehman Brothers declared bankruptcy, Bank of America purchased Merrill Lynch for approx. $50, or $29 per shareKen Sweet, Bank of America to Pay $50B for Merrill Lynch, Fox Business News, September 15, 2008. Retrieved October 1, 2009.. October, 2008, the Treasury assisted Bank of America with $25 billion through the Capital Purchase Program. In January, 2009 the Treasury invested another $20 billion.Eye on the Bailout, Bank of America, Pro Publica. Retrieved October 1, 2009. Merrill Lynch and investment bank leverage In 1975, the SEC’s trading and markets division ruled that investment banks must maintain a debt-to-net capital ratio of less than 12 to 1. In 2004, following extensive lobbying by the investment banks, the SEC under chairman Christopher Cox authorized five investment banks to develop their own net capital requirements. This enabled investment banks to push borrowing ratios to as high as 40 to 1.Stephen Labaton, Agency’s ’04 Rule Let Banks Pile Up New Debt, NY Times, October 8, 2008. Retrieved October 9, 2009 These five investment banks were Goldman Sachs, Morgan Stanley, Lehman Brothers, Bear Stearns, and Merrill Lynch. This very high debt-to-reserves helped lead to the financial crisis of 2008 by weakening the ability of these institutions to recover from losses incurred when the risky CDO and CDS bets failed.Julie Satow, Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers, NY Sun, September 18, 2008. Retrieved October 9, 2009Ben Protess, ‘Flawed’ SEC Program Failed to Rein in Investment Banks, ProPublica, October 1, 2008. Retrieved October 9, 2009 Lee A. Pickard, who had been Director of the SEC’s Division of Market Regulation when the 1975 12-1 rule was ordered, said of the change, "The SEC modification in 2004 is the primary reason for all of the losses that have occurred."Julie Satow, Ex-SEC Official Blames Agency for Blow-Up of Broker-Dealers, NY Sun, September 18, 2008. Retrieved October 9, 2009 At the time of its purchase by Bank of America was leveraged at a ratio of 35.5 to 1.slide 20, Professor Andrei Shleifer. The Financial Crisis and The Future of Capitalism, Harvard Economics Dept., June 2009. Contribution to the crisis Bank of America's strategy of growth helped lead them to become a "too big to fail" bank. In 2003, Bank of America grew to $1.4 trillion after it bought FleetBoston, making it the second-largest U.S. bank holding company in terms of assets."Sold Out: How Wall Street and Washington Betrayed America", accessed October 2009.In 2004, Bank of America purchased FleetBoston for $50 billion and in 2006, credit card giant MBNA.Profile, Hoovers, accessed July 2007. In 2008 the bank purchased Merrill Lynch during the financial crisis. In its January 16, 2009 earnings release Bank of America revealed that Merrill Lynch had suffered a massive $15.3 billion loss in its fourth quarterLouise Story, For Bank of America, the Pressure Mounts Over Merrill Deal, New York Yimes, January 16, 2009. Retrieved October 1, 2009. These losses made it necessary for the U.S. Government to increase the amount of its bailout of Bank of America. Bank of America CEO Kenneth D, Lewis later claimed that the government ordered him to complete the acquisition, even after he had discovered the losses. Lewis resigned in September, 2009, effective January 1, 2010. Bailout amounts Bank of America received $45 billion$45 billion figure from Bailout Recipients, Pro Publica, Updated September 29, 2009. in direct government aid from the TARP program, and a further $118 billion worth of guarantees against bad assets$118 billion figure from Bank of America bail-out agreed, BBC, January 16, 2009.. Political contributions Decade-long campaign contribution total (1998-2008): $11,292,260 In 2008 Bank of America led the list of TARP recipients in political contributions and lobbying, spending $14.5 millionTARP Recipients Paid Out $114 Million for Politicking Last Year, Open Secrets, Feb. 4, 2009. Retrieved October 1, 2009.. The amounts were $5,752,630 in political contributions and $8,790,000 for lobbying. These numbers do not include the fourth quarter of 2008. The 2008 top recipients of campaign contributions wereSource: Center for Responsive Politics. Campaign contribution totals accessed February 2009. Individual recipient numbers do not include the 4th Quarter of 2008. *Barack Obama (D) $230,552 *John McCain ® $126,175 *Hillary Clinton (D) $106,071 *Rudy Giuliani ® $69,050 *Chris Dodd (D) $63,100 James H. Hance Jr., then Vice Chair of Bank of America, was a Bush Ranger having raised at least $200,000 for Bush in the 2004 presidential election. Two more Bush Rangers in the top leadership were Charles M. Cawley, Ex-Chief Executive Officer of MBNA and Lance Loring Weaver, Executive Vice Chair of MBNA. Pioneers and Rangers, Texans for Public Justice, accessed August 2007. Bank of America gave $1,167,222 to federal candidates in the 05/06 election period through its three political action committees - 34% to Democrats, 65% to Republicans, and 1% to other parties. PAC #C00043489, Open Secrets, accessed July 2007. PAC #C00252866, Open Secrets, accessed July 2007. PAC #C00364778, Open Secrets, accessed July 2007. Lobbying Decade-long lobbying expenditure total (1998-2008): $28,635,440 In 2008 Bank of America led the list of TARP recipients in political contributions and lobbying, spending $14.5 millionTARP Recipients Paid Out $114 Million for Politicking Last Year, Open Secrets, Feb. 4, 2009. Retrieved October 1, 2009.. The amounts were $5,752,630 in political contributions and $8,790,000 for lobbying. 2008 Top Lobbying Expenditure Recipients: 1.Bank of America $4,090,000 2.King & Spalding $480,000 3.Quinn, Gillespie & Assoc $360,000 4.Smith-Free Group $250,000 5.Bryan Cave Strategies $160,000 The company spent $3,366,014 for lobbying in 2006. $1,380,000 went to eight outside lobbying firms with the remainder being spent using in-house lobbyists. Lobbying firms included Quinn Gillespie & Associates and Covington & Burling. Bank of America lobbying expenses, Open Secrets, accessed October 2007. Use of bailout funds for lobbying After receiving government funds, Bank of America continued to spend millions of dollars to lobby Congress, including to "fend off restrictions on executive compensation, home mortgage lending and credit card fees" as well as in opposition to the Consumer Financial Protection AgencyBarbara Barrett, Bank of America, bailout in hand, continues lobbying efforts, McClatchy News, July 21, 2009. They also hosted efforts to defeat the Employee Free Choice actSam Stein, Bailout Recipients Hosted Call To Defeat Key Labor Bill, Huffington Post, January 27, 2009.. Personnel and political appointees Senior Managementhttp://newsroom.bankofamerica.com/index.php?s=20, Bank of America, accessed October 6, 2009. *Kenneth D. Lewis, Chief Executive Officer, resigned effective December 31, 2009, $1,500,000Pay from: Yahoo Finance accessed October 2009 *J. Steele Alphin, Chief Administrative Officer *Gregory L. Curl, Chief Risk Officer *David C. Darnell, President, Global Commercial Banking *Barbara J. Desoer, President, Home Loans & Insurance, $800,000 *Anne M. Finucane, Global Chief Strategy and Marketing Officer *Sallie L. Krawcheck, Global Wealth & Investment Management *Thomas K. Montag, President, Global Banking and Markets *Brian T. Moynihan, President, Consumer & Small Business Banking *Joe L. Price, Chief Financial Officer, $800,000 *Richard K. (Ric) Struthers, President, Global Card Services Board members: http://investor.bankofamerica.com/phoenix.zhtml?c=71595&p=irol-govboard, Bank of America, accessed October 6, 2009. *Walter E. Massey, Chairman of the Board, Bank of America Corporation *Susan S. Bies, Former Member, Board of Governors of the Federal Reserve System *William P. Boardman, Retired Vice Chairman, Banc One Corporation and Retired Chairman of the Board, Visa International *Frank P. Bramble, Sr. Former Executive Officer, MBNA Corporation *Virgis W. Colbert, Senior Advisor, MillerCoors Company *Charles K. Gifford, Former Chairman, Bank of America Corporation *Charles O. Holliday, Jr., Chairman, E.I. du Pont de Nemours and Co. (DuPont) *D. Paul Jones, Former Chairman, Chief Executive Officer and President, Compass Bancshares, Inc. *Kenneth D. Lewis, Chief Executive Officer and President, Bank of America Corporation *Monica C. Lozano, Publisher and Chief Executive Officer, La Opinion *Thomas J. May, Chairman, President and Chief Executive Officer, NSTAR *Donald E. Powell, Former Chairman, Federal Deposit Insurance Corporation *Charles O. Rossotti, Senior Advisor, The Carlyle Group *Thomas M. Ryan, Chairman, President and Chief Executive Officer, CVS/Caremark Corporation *Robert W. Scully, Former Member, Office of the Chairman of Morgan Stanley Earnings and bonuses According to a report by the Attorney General of New York State Bank of America paid $3.3 billion in bonuses to executives and employeesAndrew M. Cuomo, No Rhyme or Reason, report by the Attorney General of New York, retreived Oct 4, 2009. while earning $4 billion after being a recipient of TARP bailout funds of $45 billion. Breakdown of Bank of America 2008 bonuses from the Attorney General's reportMichael Corkery, Bank of America: The Cuomo Report’s Bonus Breakdown, Deal Journal, Wall Street Journal, July 30, 2009. Retrieved Oct 6, 2009.; *Top four recipients received a combined $64.01 million. *The next four received $36.85 million. *The next six received $31.39 million. *Number that received more than $10 million: 4 *Number that received more than $8 million: 8 *Number that received more than $5 million: 10 *Number that received more than $3 million: 28 *Number that received more than $2 million: 65 *Number that received at least $1 million: 172 In addition, in 2008 Bank of America purchased Merrill Lynch. According to the report by the Attorney General of New York State Merrill Lynch paid $3.6 billion in bonuses to executives and employeesAndrew M. Cuomo, No Rhyme or Reason, report by the Attorney General of New York, retreived Oct 4, 2009. while losing $27.6 billion after being a recipient of TARP bailout funds of $10 billion. Breakdown of Merrill Lynch 2008 bonuses from the Attorney General's reportMichael Corkery, Merrill Lynch: The Cuomo Report’s Bonus Breakdown, Deal Journal, Wall Street Journal, July 30, 2009. Retrieved Oct 6, 2009.; *Top four recipients received a combined $121 million. *The next four received: a combined $62 million. *The next six received: a combined $66 million. *Number of individuals that received more than $10 million: 14 *Number that received more than $8 million: 20 *Number that received more than $5 million: 53 *Number that received more than $3 million: 149 *Number that received at least $1 million: 696 Involvement in March of Dimes The March of Dimes has funneled millions into animal testing on primates, rats, mice, cats, dogs, rabbits, pigs, sheep, guinea pigs and opossums. They include nicotine, alcohol and cocaine addiction experiments; sensory deprivation and transplanting organs from one species to another. March of Dimes, People for the Ethical Treatment of Animals, accessed June 2009 Bank of America is a corporate donor to March of Dimes. Put Your Money Where Your Mouth Is, PETA.org, accessed February 2009 Slavery reparations lawsuit In March 2002, FleetBoston - bought by BofA in 2004 - along with insurance company Aetna and railroad company CSX Transportation were named in a lawsuit filed in U.S. District Court in New York "seeking damages for abuses suffered by slaves and accusing the companies of profiting from slavery". FleetBoston traces its roots back to a bank started by John Brown, a notorious Rhode Island slave trader. "FleetBoston named in lawsuit seeking reparations for slavery", Associated Press, March 26, 2002. Ad boycott against Air America Radio Bank of America refused to advertise on the progressive Air America Radio. In October 2006, around 90 companies, including Bank of America, told ABC Radio Networks that they did not want their ads to play on radio stations that carried Air America Radio. Marc Fisher, "Air America, in the Throes of Victory?", The Washington Post, December 10, 2006. "Air America on Ad Blacklist?", FAIR, October 31, 2006. "Air America Blackout", FAIR.org/ABC memo, October 25, 2006. Contact details 100 N. Tryon Street Charlotte, NC 28255 Phone: 704-386-5681 Fax: 704-386-6699 Web: http://www.bankofamerica.com Articles & resources See also *Animal testing *Bank *Coal *Global Warming *March of Dimes *Toxic Asset Relief Program References External resources * Sold Out - How Wall Street and Washington Betrayed America , Consumer Education Foundation, March, 2009. External articles *"Profile: Bank of America", Co-op America, accessed December 2007. *"Big Bank Profile: Bank of America", Service Employees International Union, accessed October 2009. Category:Banking industryCategory:CorporationsCategory:United StatesCategory:Energy financingCategory: Environment Category: Global warming Category: Animal rights Category: Real Economy ProjectCategory: TARP Recipients